NRI funds are a good way to tackle liquidity issue in real estate market India.

Q: But however NRI are wary of investing in real estate market India due to some reason like Cost Issues, Commitment to Timeline, Construction Quality, Carpet area to sale-able area ratios.

Deep Thakur, Delhi-NCR

22nd December 2014

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Replies (7)

"Hello Deep, I would like to say that the Indian real estate sector is still a promising destination for investment across the globe. According to the Knight Frank Wealth Report 2015, the ultra rich Indians invest nearly 50 per cent of their total wealth in the real estate sector, the highest across the globe, followed by the Australians at 42 per cent. With positive growth prospects of the Indian economy and the current government's stand on infrastructure development, the Indian real estate will going to boom in the coming years, making way for NRIs to invest in real estate properties here.
"

Abhay Bhardwaj,

7th April 2015

Comment

@ Mr Deep,
The added advantage is that even if the NRI becomes a resident of India, he can still continue to receive the same rate of interest he was getting earlier. The Reserve Bank of India creates schemes to make this form of investment tempting to the NRI.

In the light of all these options, the typical NRI prefers to invest his hard-earned money in safe, government-backed routes. The real estate sector should look at how to attract these funds so that its own liquidity pressure can be eased, as well as provide a good return on investment for the NRI.

Jay, Delhi-NCR

24th December 2014

Comment

Hi Mr Deep Thakur,
NRE or Non-Resident (External) Rupee Account is the other favorite investment location for the NRI. This has the added advantage of interest income and balances being exempt from Income tax and Wealth tax. FCNR (B) is Foreign Currency Non Resident (Bank) Account, which is a term deposit, with a maximum tenure of five years. FCNRs are similar to NRE accounts, and can even be used as security to avail loans up to Rs.1 crore.

Praneetha, Delhi-NCR

24th December 2014

Comment

Hi Mr Deep,
According to me, NRO Account is Non-Resident Ordinary Rupee Account and is opened in one of four forms: current, savings, recurring or fixed deposit accounts. The NRI is allowed to remit from the NRO account up to $ 1 million every year, which can include sale proceeds of immovable property. If a foreign national is visiting India, he too can open a NRO account and remit funds through the banking or foreign exchange routes.

Sanjay Gupta, Delhi-NCR

24th December 2014

Comment

Hi,
As per my knowledge, the bulk of NRI funds are streamlined into NRE/NRO bank accounts and FCNR accounts in India. Indians living abroad see this as a safe investment versus investments in the volatile stock market, risky entrepreneurial ventures, low-return bond market or the non-professional real estate market.

Pavan Jain, Delhi-NCR

23rd December 2014

Comment

Hi Mr Deep,

In my point of view, More than $71 billion! India is the top recipient of officially recorded remittances, followed by China and Philippines a distant third. In India, these remittances are larger than the earnings from IT exports, and long term studies have found that as the rupee falls against the US dollar, these remittances to India increase. NRIs found that India was an attractive option for investment, leading to them remitting about $71 billion back to India in 2013 (according to a World Bank report), up from around $15 billion in 2001.

Neha Srivastava, Delhi-NCR

23rd December 2014

Comment

Hi Deep,
The new government at the Center has led to a revival in investment sentiment in India. Both retail and institutional investors have started putting in money in financial assets. With the general perception about the government changing, even non-resident Indians (NRIs) would be looking to gain from the strong investment scenario. But there are some reason which is creating doubt in investing in India real estate market.

Amit Raj, Delhi-NCR

22nd December 2014

Comment

Hi Mr Deep Thakur,

One of the reasons is Cost Issues:-Builders in India are not transparent enough, when it comes to costs associated with any project. Labor cost, regulatory cost and raw material cost are cited later as having escalated, and are arbitrarily added to the cost of the real estate development. Also, not all price parameters are quoted upfront – for example, parking area charges and development charges. This lack of transparency leads to an atmosphere of mistrust.

Gautam Das, Delhi-NCR

22nd December 2014

@ Mr Deep,

Another major issue is commitment to time line:-Project developers typically under-promise the time of completion of a project and end up delaying the project. This delay is often not addressed in the terms of the contract or by Indian laws. Delaying in project possession is becoming a everyday issue in India real estate market. In spite of making many rules, regulations & pacts still this is a big issue unresolved in real estate market India.

Farhan Iqbal, Delhi-NCR

22nd December 2014

Mr Deep Thakur,
As per my knowledge, another issue for NRIs is construction quality:-NRI believe that the quality of construction material is not as promised by the builder. Third party certification would go a long way in building up trust in this regard.

Sameer Khan, Delhi-NCR

22nd December 2014

@ Deep ,

The final doubt is Carpet area to sale-able area ratios:- Indian regulatory authorities have not defined these parameters for the real estate market, and this ambiguity results in NRIs being wary of what is quoted by a developer.
If real estate developers can build trust in the NRI investor, he will be willing to invest in this sector.To understand the volume of funds that the real estate industry can tap into, what kind of NRI remittances are we looking at targeting here?

Kashif Ahmed, Delhi-NCR

22nd December 2014